For nearly five months, the gold price has been caught in a narrow trading range with weakness being bought quickly in the miners after reporting two consecutive quarters of record profits.
On the upside in gold, there is resistance at $3400 and $3450, with overhead resistance on the all-time high at $3500. On the downside, there is initial support at $3350 and good weekly support at $3300, with stronger support at $3200.
A weekly gold close above $3500 would suggest a symmetrical triangle breakout target of $3850-$4000, while a move below $3200 would signal a triangle breakdown and suggest a test of key support at the $2850-$3000 region.
Following two consecutive quarters of gold miners reporting expanding margins, healthier balance sheets, and record profits, generalist funds and investors have only recently begun to take notice of this long-forgotten sector.
With mining sector participants conditioned for surprise moves being to the downside over the past several years, the price action this summer is reminding investors that once this volatile sector switches from bear to bull, surprise moves are to the upside.
Although the mining sector remains technically long-term extreme overbought, gold stocks continue to trade at a discount to the metal as generalist investors have yet to fully embrace gold stocks after fleeing the sector en masse over a decade ago.
Despite several new record highs in gold and the miners nearing all-time highs, we are seeing few signs of frothiness that could signal a potential long-term top.
Since an historic 13-year cup & handle breakout in March 2024, both gold and gold miner ETFs continue to be an afterthought for the average investor distracted by priced-to-perfection AI stocks.
A telling ETF Market Share of Gold ETFs vs All ETF Assets chart, and an ETF Market Share of Gold Miner ETFs vs All ETF Assets chart here from Topdown Charts shows generalists have yet to fully embrace this precious metals bull market.
Moreover, the high-risk TSX-Venture junior index (CDNX) remains over 75% below its all-time high reached in 2007 when gold was trading near $1000, and nearly 30% from its highs seen in 2021 when gold was at $2000.
And that is in nominal terms, not inflation-adjusted terms. Following a spike low at 330 in early 2020, the TSX-V had tripled in just one year. A similar move back to the peak at 1113 in January 2021, would be a 75% rise from the April breakout at 640.
However, the Gold Miners Bullish Percent index (BPGDM), not a sentiment gauge, so much as a momentum gauge, has flatlined at 100% to signal a near-term interim peak in gold stocks being imminent.
During strong bull market uptrends this index often oscillates between readings in the mid-70s to the high 90s and rarely hits 100. If share prices move slightly lower, or sideways, the BPGDM will often reset down to the 60s or 70s.
With both gold and silver down for the week, GDX and GDXJ are in the process of breaking out of another bull flag to set up a possible blow-off move to their breakout targets of $60-$65 and $80-$85, respectively, before a possible near-term extended correction begins.
Importantly, gold stock weakness is being bought not only while gold continues to trade sideways this week, but also as “risk-off” has entered the marketplace ahead of arguably the economic highlight of the month.
At 7am EST this morning, Federal Reserve Chairman Jerome Powell will deliver his keynote speech at the annual Jackson Hole Fed symposium. Powell is expected to update the Fed's monetary policy framework, just as the Trump administration has turned up the heat in the central bank’s kitchen.
Following last week's threat to allow a lawsuit against Fed Chair Jerome Powell over the cost of ongoing renovations of the Federal Reserve buildings, President Donald Trump on Wednesday called on Fed Governor Lisa Cook to resign, intensifying his effort to gain influence over the world's most powerful central bank.
Trump cited a call by the head of the U.S. Federal Housing Finance Agency Bill Pulte, urging the Department of Justice to probe Cook over alleged mortgage fraud.
The Commander-in-Chief posted, “Cook must resign now!!!” The Fed Governor responded by saying she won’t be bullied into quitting. The clash sent stocks and the U.S. dollar down, while both gold and silver moved up sharply mid-week.
The bond market also flinched at the news Wednesday. “The news was a reminder of the lingering concerns over future Fed independence and risks of fiscal dominance, though the extent of the market reaction was fairly modest. The most sustained reaction was in gold (+0.98%),” Jim Reid and his team at Deutsche Bank told clients.
Fed Chair Jerome Powell and Governor Lisa Cook have now both been referred to the Department of Justice by Trump’s political allies, in the hopes that criminal charges can be brought against them.
If Cook, a Biden appointee, departs, Trump will have the opportunity to nominate another permanent voting member who backs lower interest rates to the central bank. The law does not permit the firing of Fed officials after their confirmation by the Senate, unless there is "cause" to do so.
Trump bull horning a lawsuit and now a mortgage-fraud probe of a Fed official, while tying it to Fed Chairman Powell, could be laying the groundwork for the President to fire both Cook and Powell “for cause.”
Credible criminal allegations may qualify as “cause” in the Supreme Court, where a third of justices are Trump’s appointees. That could open the door to further firings and a rapid loss of Fed independence, which would be a strong catalyst for much higher gold prices.
Trump is also naming potential replacements long before Powell’s term is up in May 2026, which adds to growing fears of the Fed losing its independence while keeping gold well bid.
The Federal Reserve’s independence is paramount, as monetary policy is made based on economic data, not short-term political pressures.
The International Monetary Fund (IMF) recently warned that any loss of central bank independence could undermine efforts to keep inflation expectations in check, potentially triggering a wave of financial, monetary and macroeconomic instability.
In his multiple rants against Jerome Powell and the Federal Reserve, Trump has complained that new federal debt is too expensive, and the U.S. government has been spending too much on interest. Trump has explicitly stated that the central bank ought to force down interest rates, so that debt would be cheaper.
Yet, July’s U.S. federal spending came in last week as the highest ever, topping even the grotesque spending of July 2020 during the dark days of covid panic.
The Trump administration and Congress spent nearly two dollars for every dollar in tax revenue, for a monthly deficit of $291 billion. Not surprisingly, the U.S. federal debt continues to surge upward, with total debt recently passing the $37 trillion mark.
With fears of a global sovereign debt crisis, the percentage of gold in central bank total currency reserves has doubled to around 20% over the past six years. And there is hardly any reason why this trend should stop, but many reasons why it will continue.
This spending will certainly not be reined in by Trump’s “Big, Beautiful Bill” which further inflates federal spending, and contains only some token budget cuts.
In May, the European Central Bank warned of the sharp rise in gold prices. And earlier this month, the Federal Reserve published an article on the subject of revaluations of gold reserves.
Meanwhile, despite President Trump's high-profile diplomatic push, the latest round of frantic diplomacy aimed at ending the war in Ukraine has exposed just how far apart Moscow and Kyiv remain on the basic terms of peace.
Russian President Vladimir Putin is demanding that Ukraine give up all of the eastern Donbas region, renounce ambitions to join NATO, remain neutral, and keep Western troops out of the country.
In response, President Zelenskyy has firmly rejected these terms, stating that Ukraine's "sovereignty and freedom are not bargaining chips."
With even a temporary ceasefire proving to be a major sticking point, the prospect of a near-term resolution to Europe's deadliest conflict since WWII appears remote.
Ongoing wars (Russia/Ukraine; Israel and most everyone in the Middle East), genocide in Gaza, wars in Africa including genocide, rising authoritarianism, particularly in the U.S., and deeply polarized politics remain catalysts for higher gold prices.
Several state Governors are refusing to comply with the Trump Administration and tensions have been boiling since Trump won re-election.
We have reached a point in the U.S. where neither side of the political aisle sees the other as a legitimate rival. Politicians see their opponents as an existential threat, which goes beyond themselves and extends to their supporters.
A major and unexpected geopolitical event could spike both gold and silver to record highs in a heartbeat.
The real-money JMJ Portfolio is up 114% thus far is 2025, massively outperforming both GDX and GDXJ. With the miners due to consolidate recent outsized gains, weakness is being bought quickly in the quality junior issues yet to catch up with the sector.
After painstakingly accumulating positions in high quality juniors heading into 2025, this summer’s price action is why being right and sitting tight is the best course of action following a confirmed significant breakout in this tiny sector.
Nevertheless, with an over-extended mining sector due for some healthy profit-taking soon, a buying opportunity in quality juniors is likely fast approaching.
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